What to Watch

Crude Edges Down

Oil prices had a bad run this week.

Crude lost over 5% of it value because of a host of factors including an appreciating dollar, fears about a global trade war and a surge in U.S. inventories.

“The selloff over the past few days has been about everything but oil fundamentals,” said Emily Ashford, director of energy research at Standard Chartered.

A pledge by President Donald Trump on Thursday to impose tariffs on steel and aluminum imports sent global markets reeling.

U.S. officials have primarily accused China of flooding the world with cheap steel and aluminum due to excess capacity in its industries.

But the Trump administration’s move to put up barriers to trade is unlikely to impact China, as the country accounted for about 2.9% of total U.S. steel imports, according to analysts for Wood Mackenzie.

Meanwhile, U.S. sanctions against Russia prevented Exxon Mobil Corp. from pursuing ambitious plans to explore for oil north of Siberia.

But the final blow, some experts said, may have been delivered by lower oil prices.

On Friday, Brent crude, the global oil benchmark, fell 0.28% to $63.65 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.33% at $60.79 a barrel.

Energy News

Shale Oil and Wall Street Executives Reaped Millions in Recent Years

Silicon Valley and the shale boom have showered company founders with huge paydays. Stock awards paid out $1.1 billion to Richard D. Kinder, a co-founder of pipeline company Kinder Morgan Inc., in 2011. Meanwhile, Facebook Inc. founder and CEO Mark Zuckerberg had a $3.3 billion payday in 2013 from exercised stock options.

Australian Watchdog Group Sues Rio Tinto Over Mozambique Claims

The Australian Securities and Investments Commission said on Friday it has taken legal action against the mining giant Rio Tinto PLC and two former executives over claims they misled investors about the value of Mozambique coal assets obtained in an acquisition that caused huge losses. U.S. regulators sued the firm over the same matter in 2017. Rio Tinto valued the mining assets in Mozambique at more than $3 billion despite an internal assessment that they were worth negative $680 million.

“The top three companies in Russia a decade ago were Gazprom, Sberbank and Rosneft. Today, they are still the largest… Unless there is significant change in Russia, the same three companies will still dominate Russia’s corporate landscape in 2027”

– Charles Robertson, Chief Economist at Renaissance Capital

Exxon Assessing Earthquake Damage at Its Papua New Guinea LNG Operation

An industry source told Reuters that ExxonMobil Corp. has declared a force majeure event on exports from its liquefied natural gas project in Papua New Guinea, though the company itself declined comment on the matter, saying only that it was focused on assessing damage from Monday’s powerful earthquake.

WSJ Energy In-Depth

Russian Meddling on Social Media Targeted U.S. Energy Industry, Report Says

Russian backed-propaganda groups also targeted the U.S. energy industryand not just last year’s elections, write the WSJ’s Georgia Wells and Timothy Puko.

Internet Research Agency, an instrument of Moscow, used social media to sow division among Americans in regards to the U.S. oil sector in order to benefit Russia, the world’s largest oil producer, according to a congressional staff report.

Starting in 2015, workers at the IRA posted photos and messages on Facebook, Instagram and Twitter encouraging protests against pipeline construction in the U.S., calling for the abandonment of fossil fuels and stoking American controversy around climate change, according to the report by the majority staff on the House Committee on Science, Space and Technology.

Pipelines were allegedly one of the primary targets of the Russian actors.

Many of the posts encouraged protests of pipeline construction, including the Dakota Access Pipeline, Keystone XL and Colonial pipelines, the report says.

Big Number

0.5%

Refiners are feeling the creeping impact of a decision by the International Maritime Organization aimed at reducing the amount of sulfur in marine fuel, according to analysts.

The IMO, the United Nations’ shipping regulator, mandated in 2016 that oceangoing vessels switch to using 0.5% sulphur bunker fuels starting in 2020. The decision will affect the world’s 50,000 merchant ships and the petroleum products industry.

Next year will be crucial for refiners, “when the shockwaves from this momentous shift …[hits] the market,” said analysts for Energy Aspects in a recent note. Some refineries are already refusing to sign term crude deals beyond the second quarter of 2019, “fearing a big adjustment in the market,” noted analysts.

FutureCurve

Today: Baker Hughes releases weekly data on the number of rigs drilling for oil in the U.S.

March 5-9: IHS Markit hosts the CERAWeek energy conference in Houston. The speakers include IHS Markit Vice Chairman Dr. Daniel Yergin and Amin Nasser, president and CEO of Saudi Arabia Oil Co., or Saudi Aramco.

June 5-6: The London Crude Oil Summit. The speakers include Shell Vice President of Crude Trading Mike Muller and Franco Magnani CEO, of Eni Trading and Shipping.

Reporter’s Notebook

The WSJ’s Dan Molinski on a deadly natural gas accident. Atmos Energy says it’s cutting natural gas service to about 2,800 homes in northwest Dallas so it can replace a system of leaky pipelines suspected to be the cause of a gas explosion Friday that killed a 12-year-old girl. It said the work will take two or three weeks, and is offering hotels to people who want to leave their homes. “We will be working around the clock,” says John Paris, president of Atmos Energy’s Mid-Tex division. Federal investigators from the NTSB continue to probe the precise cause of the explosion, but Atmos says in the statement it believes recent “extraordinary rains” in the Dallas area caused the leaks.

WSJ correspondent Nektaria Stamouli on drilling in Europe.Greece’s Parliament gave the green light for oil-and-gas exploration in the west of the country to groups that include France’s Total and Italy’s Edison. Licenses for exploration in four blocks were approved in 2016, but had to be ratified by the parliament. Greece’s energy minister George Stathakis said the country is catching up with Cyprus, Egypt and Israel. The companies plan to start test drilling in 2019.

The WSJ’s Robb Stewart on gas refiners in Australia. The operators of liquefied natural gas plants in Australia’s north and west were approved to coordinate maintenance, freeing them from the scramble for a limited pool of skilled contractors and specialized equipment. In a move that will improve efficiency and maximize production, the antitrust regulator is allowing Woodside, Shell, Chevron and Inpex to schedule maintenance together without the risk of breaching competition laws, though they will need to publicly disclose schedules, and the approval is for five years and not the 10 sought by the companies. It’s similar to the authorization given in 2016 to the three big LNG operations in eastern Queensland.